Compliance risk refers to the potential for an organization to face legal penalties, financial losses, or reputational damage due to failure to adhere to laws, regulations, and internal policies. This risk can arise from various sources, including changes in regulatory requirements, inadequate internal controls, or employee misconduct. Organizations must actively monitor and manage compliance risk to ensure they operate within the legal framework. To mitigate compliance risk, companies often implement comprehensive compliance programs that include training, audits, and regular assessments. These programs help identify potential vulnerabilities and ensure that employees understand their responsibilities. By fostering a culture of compliance, organizations can reduce the likelihood of violations and enhance their overall integrity.